| | | Gemini AI regarding COMEX action to break the Hunt Bros:
To break the Hunt brothers' silver corner, COMEX (Commodity Exchange, Inc.) implemented "Silver Rule 7" in January 1980, severely restricting margin purchases, while the Federal Reservepressured banks to stop lending for speculation, which dried up the brothers' credit, forced massive margin calls, and led to a price crash on "Silver Thursday" (March 27, 1980).
Key Actions by COMEX & Regulators:
- Silver Rule 7: COMEX introduced this emergency rule to hike margin requirements, making it much more expensive to buy silver futures with borrowed money, directly hindering the Hunts' leveraged strategy.
- Position Limits: The exchange also placed restrictions preventing traders from taking new, large long positions, limiting how much more the Hunts could accumulate.
- Credit Squeeze: The Federal Reserve, under Paul Volcker, signaled major banks to curb speculative lending, cutting off the main source of funds for the Hunts' massive borrowing.
The Outcome:
- Margin Calls: As silver prices, which had peaked near $50, began to fall, the Hunts couldn't meet the dramatically increased margin calls on their huge positions.
- Silver Thursday: On March 27, 1980, the brothers failed a $100 million margin call, triggering panic, a 50% price drop in one day, and a near-collapse of firms involved, requiring a bank bailout for the Hunts.
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